EXHIBIT 10.26
LONG TERM POWER PURCHASE
POWER PURCHASE CONTRACT
BETWEEN
SOUTHERN CALIFORNIA EDISON COMPANY
AND
MAGMA ELECTRIC CO.
TABLE OF CONTENTS
-----------------
SECTION TITLE PAGE
- ------- ----- ----
1. PROJECT SUMMARY .......................................... 1a
2. DEFINITIONS .............................................. 2
3. TERM ..................................................... 8
4. GENERATING FACILITY ...................................... 8
5. OPERATING OPTIONS ........................................ 17
6. INTERCONNECTION FACILITIES ............................... 18
7. METERING ................................................. 19
8. POWER PURCHASE PROVISIONS ................................ 20
9. PAYMENT AND BILLING PROVISIONS ........................... 39
10. TAXES .................................................... 42
11. TERMINATION .............................................. 42
12. SALE OF GENERATING FACILITY .............................. 42
13. ABANDONMENT OF PROJECT ................................... 43
14. LIABILITY ................................................ 44
15. INSURANCE ................................................ 46
16. UNCONTROLLABLE FORCES .................................... 48
17. NON-DEDICATION OF FACILITIES ............................. 50
18. PRIORITY OF DOCUMENTS .................................... 50
19. NOTICES AND CORRESPONDENCE ............................... 51
20. PREVIOUS COMMUNICATIONS .................................. 51
21. THIRD PARTY BENEFICIARIES ................................ 51
22. NON-WAIVER ............................................... 52
23. DISPUTES ................................................. 52
24. SUCCESSORS AND ASSIGNS ................................... 54
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25. EFFECT OF SECTION HEADINGS ............................... 54
26. TRANSMISSION ............................................. 54
27. AMENDMENT ................................................ 55
28. GOVERNING LAW ............................................ 55
29. CONFIDENTIALITY .......................................... 55
30. MULTIPLE ORIGINALS ....................................... 56
APPENDIX A A-1
APPENDIX B B-1
APPENDIX C C-1
AMENDMENT NO. 1 1
AMENDMENT NO. 2 1
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1. PROJECT SUMMARY
This Contract is entered into between Southern California Edison Company
("Edison") and Magma Electric Co., a Nevada corporation ("Seller").
Seller is willing to construct, own, and operate a Qualifying Facility
and sell electric power to Edison and Edison is willing to purchase
electric power delivered by Seller to Edison at the Point of
Interconnection pursuant to the terms and conditions set forth as
follows:
1.1 All Notices shall be sent to Seller at the following address:
Magma Electric Co.
P.O. Box 17760
Los Angeles, CA 90017
Attn: President
1.2 Seller's Generating Facility:
a. Nameplate Rating: 34,000 kW.
b. Location: Niland, Imperial County, California
c. Type (Check One):
[ ] Cogeneration Facility
[X] Small Power Production Facility
1.3 Contract Capacity: 29,500 kW
1.3.1 Estimated as-available
capacity: 4,500 kW.
1.4 Expected annual production: 206,736,000 kWh.
1.5 Expected Date of Firm Operation: September 1, 1985
1a
1.6 Contract Term: 30 years
1.7 Operating options pursuant to Section 5: (Check One)
[X] Operating Option I. Excess Generator output dedicated to Edison. No
electric service or standby service required from Edison.
[ ] Operating Option II. Entire Generator output dedicated to Edison
with separate electric service required from Edison.
1.8 The Capacity Payment Option selected by Seller pursuant to Section 8.1
shall be: (Check One)
[ ] Option A - As-available capacity based upon:
[ ] Standard Offer No. 1 Capacity Payment Schedule, or
[ ] Forecast of Annual As-Available Capacity Payment Schedule
a. The as-available capacity price (first year):
$______ kW-yr. (Appendix A)
[X] Option B - Firm Capacity
b. The Contract Capacity Price: -$l58 kW-yr. (Firm Capacity) per Amend
2 [section] 5.
1.9 The Energy Payment Option selected by Seller pursuant to Section 8.2
shall be: (Check One)
[X] Option 1 - Forecast of Annual Marginal Cost of Energy in effect at
date of execution of this Contract. (Appendix B)
1b
[ ] Option 2 - Levelized Forecast of Marginal Cost of Energy in
effect at date of execution of this Contract. (Appendix C)
For the energy payment refund pursuant to Section 8.5 under Option
2, Edison's Incremental Cost of Capital is 15%.
Seller may change once between Options 1 and 2, provided Seller delivers
written notice of such change at least 90 days prior to the date of Firm
Operation.
For Option 1 or 2, Seller elects to receive the following
percentages in 20% increments, the total of which shall equal 100%:
100 percent of Forecast of Annual Marginal Cost of Energy,
and
00 percent of Edison's published avoided cost of energy as updated
periodically and accepted by the Commission.
1c
GENERAL TERMS AND CONDITIONS
2. DEFINITIONS
When used with initial capitalizations, whether in the singular or in the
plural, the following terms shall have the following meanings:
2.1 Adjusted Capacity Price: The $/kW-yr capacity purchase price based on
the Capacity Payment Schedule in effect at the time of Contract
execution for the time period beginning on the date of Firm operation
for the first generating unit and ending on the date of termination
or reduction of Contract Capacity under Capacity Payment Option B.
2.2 Appendix A: Capacity Payment Schedule - Forecast of Annual As-
Available Capacity
2.3 Appendix B: Energy Payment Schedule - Forecast of Annual Marginal
Cost of Energy
2.4 Appendix C: Energy Payment Schedule - Levelized Forecast of Marginal
Cost of Energy
2.5 Capacity Payment Schedule(s): Published capacity payment schedule(s)
as authorized by the Commission and in effect at the time of
execution of this Contract for as-available or firm capacity.
2.6 Commission: The Public Utilities Commission of the State of
California.
2.7 Contract: This document and Appendices, as amended from time to time.
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2.8 Contract Capacity: The electric power producing capability of the
Generating Facility which is committed to Edison.
2.9 Contract Capacity Price: The capacity purchase price from the
Capacity Payment Schedule approved by the Commission and in effect on
the date of execution of this Contract for Capacity Payment Option B.
2.10 Contract Term: Period in years commencing with date of Firm Operation
during which Edison shall purchase electric power from Seller.
2.11 Current Capacity Price: The $/kW-yr capacity price provided in the
Capacity Payment Schedule determined by the year of termination or
reduction of Contract Capacity and the number of years from such
termination or reduction to the expiration of the Contract Term for
Capacity Payment Option B.
2.12 Edison: The Southern California Edison Company.
2.13 Edison Electric System Integrity: The state of operation of Edison's
electric system in a manner which is deemed to minimize the risk of
injury to persons and/or property and enables Edison to provide
adequate and reliable electric service to its customers.
2.14 Emergency: A condition or situation which in Edison's sole judgment
affects Edison Electric System Integrity.
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2.15 Energy: Kilowatthours generated by the Generating Facility which are
purchased by Edison at the Point of Interconnection.
2.16 Firm Operation: The date agreed on by the Parties on which each
generating unit of the Generating Facility is determined to be a
reliable source of generation and on which such unit can be
reasonably expected to operate continuously at its effective rating
(expressed in kW).
2.17 First Period: The period of the Contract Term specified in Section
3.1.
2.18 Forced Outage: Any outage other than a scheduled outage of the
Generating Facility that fully or partially curtails its electrical
output.
2.19 Generating Facility: All of Seller's generators, together with all
protective and other associated equipment and improvements, necessary
to produce electrical power at Seller's Facility excluding associated
land, land rights, and interests in land.
2.20 Generator: The generator(s) and associated prime mover(s), which are
a part of the Generating Facility.
2.21 Interconnection Facilities: The electrical interconnection facilities
furnished, at no cost to Edison, by Seller, or by the Interconnecting
Utility on the Seller's behalf, which are appurtenant to, and/or
incidental to, the Project. The Interconnection
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Facilities shall include, but are not limited to, transmission lines
and/or distribution lines between the Project and transmission lines
and/or distribution lines of the Interconnecting Utility, relays,
power-circuit breakers, metering devices, telemetering devices, and
other control and protective devices specified by the Interconnecting
Utility as necessary for operation of the Project in parallel with
the Interconnecting Utility's electric system.
2.22 Interconnecting Utility: The electric utility, or any other utility
which takes delivery of electric energy generated by the Generating
Facility.
2.23 Operate: To provide the engineering, purchasing, repair, supervision,
training, inspection, testing, protection, operation, use,
management, replacement, retirement, reconstruction, and maintenance
of and for the Generating Facility in accordance with applicable
California utility standards and good engineering practices.
2.24 Operating Representatives: Individual(s) appointed by each Party for
the purpose of securing effective cooperation and interchange of
information between the Parties in connection with administration and
technical matters related to this Contract.
2.25 Parties: Edison and Seller.
2.26 Party: Edison or Seller.
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2.27 Peak Months: Those months which the Edison annual system peak demand
could occur. Currently, but subject to change with notice, the peak
months for the Edison system are June, July, August and September.
2.28 Point of Interconnection: The point where the electrical energy
generated by the Seller, at the Project, is delivered to the Edison
electric system.
2.29 Project: The Generating Facility and Interconnection Facilities
required to permit the Generator to deliver electric energy and make
capacity available to Interconnecting Utility.
2.30 Qualifying Facility: Cogeneration or Small Power Production Facility
which meets the criteria as defined in Title 18, Code of Federal
Regulations, Section 292.201 through 292.207.
2.31 Renewable Resources: Wind parks, small hydroelectric, solar, and
geothermal resources which produce electric power.
2.32 Second Period: The period of the Contract Term specified in Section
3.2.
2.33 Seller: The Party identified in Section 1.0.
2.34 Seller's Facility: The premises and equipment of Seller located as
specified in Section 1.2.
2.35 Small Power Production Facility: The facilities and equipment which
use biomass, waste, or Renewable Resources, including wind, solar,
geothermal, and
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water, to produce electrical energy as defined in Title 18, Code of
Federal Regulations, Section 292.201 through 292.207.
2.36 Summer Period: Defined in Edison's Tariff Schedule No. TOU-8 as now
in effect or as may hereafter be authorized by the Commission.
2.37 Tariff Schedule No. TOU-8: Edison's time-of-use energy tariff for
electric service exceeding 500 kW, as now in effect or as may
hereafter be authorized by the Commission.
2.38 Uncontrollable Forces: Any occurrence beyond the control of a Party
which causes that Party to be unable to perform its obligations
hereunder and which a Party has been unable to overcome by the
exercise of due diligence, including but not limited to flood,
drought, earthquake, storm, fire, pestilence, lightning and other
natural catastrophes, epidemic, war, riot, civil disturbance or
disobedience, strike, labor dispute, action or inaction of government
or other proper authority, which may conflict with the terms of this
Contract, or failure, threat of failure or sabotage of facilities
which have been maintained in accordance with good engineering and
operating practices in California.
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2.39 Winter Period: Defined in Edison's Tariff Schedule No. TOU-8 as now
in effect or as may hereafter be authorized by the Commission.
3. TERM
This Contract shall be effective upon execution by the Parties and shall
remain effective until either Party gives 90 days prior written notice of
termination to the other Party, except that such notice of termination
shall not be effective to terminate this Contract prior to expiration of
the Contract Term specified in Section 1.6.
3.1 The First Period of the Contract Term shall commence upon date of
Firm Operation but not later than 5 years from the date of execution
of this Contract.
a. If the Contract Term specified in Section 1.6 is 15 years, the
First Period of the Contract Term shall be for 5 years.
b. If the Contract Term specified in Section 1.6 is 20, 25, or 30
years, the First Period of the Contract Term shall be for 10
years.
3.2 The Second Period of the Contract Term shall commence upon expiration
of the First Period and shall continue for the remainder of the
Contract Term.
4. GENERATING FACILITY
4.1 Ownership
The Generating Facility shall be owned by Seller.
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4.2 Design
4.2.1 Seller, at no cost to Edison, shall:
a. Design the Generating Facility.
b. Acquire all permits and other approvals necessary for the
construction, operation, and maintenance of the Generating
Facility.
c. Complete all environmental impact studies necessary for
the construction, operation, and maintenance of the
Generating Facility.
4.2.2 Edison shall have the right to review the design of the
Generating Facility's electrical system and the Seller's
Interconnection Facilities. Edison shall have the right to
request modifications to the design of the Generating
Facility's electrical system and the Seller's Interconnection
Facilities. Such modifications shall be required if necessary
to maintain Edison Electric System Integrity. If Seller does
not agree to such modifications, resolution of the difference
between the Parties shall be made pursuant to Section 23.
4.3 Construction
Edison shall have the right to review, consult with, and make
recommendations regarding Seller's construction schedule and to
monitor the construction and start-up of the Project. Seller shall
notify
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Edison, as far in advance of Firm Operation as reasonably possible, of
changes in Seller's Construction Schedule which may affect the date of
Firm Operation.
4.4 Operation
4.4.1 Edison shall have the right to monitor operation of the Project and
may require changes in Seller's method of operation if such changes
are necessary, in Edison's sole judgment, to maintain Edison
Electric System Integrity.
4.4.2 Seller shall notify, in writing, Edison's Operating Representative
at least 14 days prior to the initial delivery of electrical energy
from the Project to the Point of Interconnection.
4.4.3 Edison shall have the right to require Seller to curtail or reduce
the delivery of electrical energy from the Project to the Edison
electric system whenever Edison determines, in its sole judgment,
that such curtailment or reduction is necessary to facilitate
maintenance of Edison's facilities, or to maintain Edison Electric
System Integrity. If Edison requires Seller to curtail or reduce
the delivery of electrical energy from the Project to the Edison
electric system pursuant to this Section 4.4.3, Seller
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shall have the right to continue to serve its total electrical
requirements. Each Party shall endeavor to correct, within a
reasonable period, the condition on its system which necessitates
the curtailment or the reduction of delivery of electrical energy
from the Project. The duration of the curtailment or the reduction
shall be limited to the period of time such a condition exists.
4.4.4 Each Party shall keep the other Party's Operating Representative
informed as to the operating schedule of their respective
facilities affecting each other's operation hereunder, including
any reduction in Contract Capacity availability. In addition,
Seller shall provide Edison with reasonable advance notice
regarding its scheduled outages including any reduction in Contract
Capacity availability. Reasonable advance notice is as follows:
SCHEDULED OUTAGE ADVANCE NOTICE
EXPECTED DURATION TO EDISON
----------------- ---------
Less than one day 24 Hours
One day or more (except major overhauls) 1 Week
Major overhaul 6 Months
4.4.5 Notification by each Party's Operating Representative of outage
date and duration
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should be directed to the other Party's Operating Representative by
telephone.
4.4.6 Seller shall not schedule major overhauls during Peak Months.
Currently, but subject to change with notice, the Peak Months for
the Edison system are June, July, August and September.
4.4.7 Seller shall maintain an operating log at Seller's Facility with
records of: real and reactive power production; changes in
operating status, outages, Protective Apparatus operations; and any
unusual conditions found during inspections. Changes in setting
shall also be logged for Generators which are "block-loaded" to a
specific kW capacity. In addition, Seller shall maintain records
applicable to the Generating Facility, including the electrical
characteristics of the Generator and settings, adjustments of the
Generator control equipment, and well-field information.
Information maintained pursuant to this Section 4.4.7 shall be
provided to Edison, within 30 days of Edison's request.
4.4.8 At Edison's request, Seller shall make all reasonable effort to
deliver power at an average rate of delivery at least equal to the
Contract Capacity during periods of Emergency. In the
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event that the Seller has previously scheduled an outage coincident
with an Emergency, Seller shall make all reasonable efforts to
reschedule the outage. The notification periods listed in Section
4.4.4 shall be waived by Edison if Seller reschedules the outage.
4.4.9 Seller shall demonstrate the ability to provide Edison the
specified Contract Capacity within 30 days of the date of Firm
Operation. Thereafter, at least once per year at Edison's request,
Seller shall demonstrate the ability to provide Contract Capacity
for a reasonable period of time as required by Edison. Seller's
demonstration of Contract Capacity shall be at Seller's expense and
conducted at a time and pursuant to procedures mutually agreed upon
by the Parties. If Seller fails to demonstrate the ability to
provide the Contract Capacity, the Contract Capacity shall be
reduced by agreement of the Parties pursuant to Section 8.1.2.5.
4.410 The Seller warrants that the Generating Facility meets the
requirements of a Qualifying Facility as of the effective date of
this Contract and continuing through the Contract Term.
4.4.11 The Seller warrants that the Generating Facility shall, at all
times, conform to all applicable
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laws and regulations. Seller shall obtain and maintain any
governmental authorizations and permits for the continued operation
of the Generating Facility. If, at any time, Seller does not hold
such authorizations and permits, Seller agrees to reimburse Edison
for any loss which Edison incurs as a result of the Seller's failure
to maintain governmental authorization and permits.
4.4.12 In the event electrical energy from the Project is curtailed or
reduced pursuant to Sections 4.4.3, 16 or 8.4, the Seller, in its
sole discretion, may elect to (i) sell said electrical energy to a
third party or (ii) deliver said electrical energy to a third
party for future delivery to Edison at times and at amounts
agreeable to Edison. The Seller shall be responsible for making
all such arrangements. The provisions in this Section 4.4.12 shall
only apply for the duration of the curtailment or reduction.
4.4.13 Seller shall maintain operating communications with the Edison
switching center designated by the Edison Operating
Representative. The operating communications shall include, but
not be limited to, system paralleling or separation,
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scheduled and unscheduled shutdowns, equipment clearances, levels
of operating voltage or power factors, and daily capacity and
generation reports.
4.5 Maintenance
4.5.1 Seller shall maintain the Generating Facility in accordance with
applicable California utility industry standards and good
engineering and operating practices. Edison shall have the right
to monitor such maintenance of the Generating Facility. Seller
shall maintain and deliver a maintenance record of the Generating
Facility to Edison's Operating Representatives upon request.
4.5.2 Seller shall make a reasonable effort to schedule routine
maintenance during Off-Peak Months and expected minimal generation
periods for renewable resources. Outages for scheduled maintenance
shall not exceed a total of 30 peak hours for the Peak Months.
4.5.3 The allowance for scheduled maintenance is as follows:
a. Outage periods for scheduled maintenance shall not exceed 840
hours (35 days) in any 12-month period. This allowance may be
15
used in increments of an hour or longer on a consecutive or
nonconsecutive basis.
b. Seller may accumulate unused maintenance hours on a
year-to-year basis up to a maximum of 1,080 hours (45 days).
This accrued time must be used consecutively and only for major
overhauls.
4.6 Any review by Edison of the design, construction, operation, or
maintenance of the Project is solely for the information of Edison. By
making such review, Edison makes no representation as to the economic and
technical feasibility, operational capability, or reliability of the
Project. Seller shall in no way represent to any third party that any
such review by Edison of the Project, including, but not limited to, any
review of the design, construction, operation, or maintenance of the
Project by Edison, is a representation by Edison as to the economic and
technical feasibility, operational capability, or reliability of said
facilities. Seller is solely responsible for economic and technical
feasibility, operational capability, and reliability thereof.
4.7 Edison shall have access to the Seller's geothermal field and power-
generating facilities for the purpose of gathering technical information
and records. The technical information and records shall include, but
16
not be limited to, drilling data, well-testing data, well-production data
and design, power plant performance data and design, environmental data,
brine handling design, and operation and maintenance data. Edison agrees
not to interfere with Seller's rules and operating regulations.
5. OPERATING OPTIONS
5.1 Seller shall elect in Section 1.7 to Operate its Generating Facility
pursuant to one of the following options:
a. Operating Option I: Seller dedicates the excess Generator output
to Edison with no electrical service or standby service required
from Edison.
b. Operating Option II: Seller dedicates the entire Generator
output to Edison with electrical service required from Edison.
5.2 After expiration of the First Period of the Contract Term, Seller may
change the Operating Option, but not more than once per year upon at
least 90 days prior written notice to Edison. A reduction in Contract
Capacity as a result of a change in operating options shall be
subject to Section 8.1.2.5. Edison shall not be required to remove or
reserve capacity of Interconnection Facilities made idle by a change
in operating options. Edison may dedicate any such idle Interconnection
Facilities at any time to serve other
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customers or to interconnect with other electric power sources.
Edison shall process requests for changes of operating option in the
chronological order received.
6. INTERCONNECTION FACILITIES
6.1 Seller shall design, engineer, procure, construct, and test the
Interconnection Facilities in accordance with applicable California
utility standards and good engineering practices and the rules and
regulations of the Interconnecting Utility.
6.2 The design, installation, operation, maintenance, and modifications
of the Interconnection Facilities shall be at Seller's expense.
6.3 Seller, at no cost to Edison, shall acquire all permits and approvals
and complete all environmental impact studies necessary for the
design, installation, operation, and maintenance of the
Interconnection Facilities.
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7. METERING
7.1 All meters and equipment used for the measurement of electrical power
for determining Edison's payments to Seller pursuant to this Contract
shall be provided, owned, and maintained by Edison and/or the
Interconnecting Utility at Seller's expense.
7.2 If Seller's Generating Facility is rated at a Capacity of 500 kW or
greater, then Edison, at its option, may install at Seller's expense,
generation metering and/or telemetering equipment.
7.3 Edison's or the Interconnecting Utility's meters shall be sealed and
the seals shall be broken only when the meters are to be inspected,
tested, or adjusted by Edison or Interconnecting Utility. Seller
shall be given reasonable notice of testing and have the right to
have its Operating Representative present on such occasions.
7.4 Edison's or Interconnecting Utility's meters installed pursuant to
this Contract shall be tested by Edison or Interconnecting Utility,
at Edison's or Interconnecting Utility's expense, at least once each
year and at any reasonable time upon request by either Party, at the
requesting Party's expense. If Seller makes such request, Seller
shall reimburse said expense to Edison or Interconnecting Utility
within thirty days after presentation of a bill therefor.
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7.5 Metering equipment found to be inaccurate shall be repaired,
adjusted, or replaced by Edison or Interconnecting Utility such that
the metering accuracy of said equipment shall be within plus or minus
two percent. If metering equipment inaccuracy exceeds plus or minus
two percent, the correct amount of Energy and capacity delivered
during the period of said inaccuracy shall be estimated by Edison and
agreed upon by the Parties.
8. POWER PURCHASE PROVISIONS
Prior to the date of Firm Operation, Seller shall be paid for Energy only
pursuant to Edison's published avoided cost of energy based on Edison's
full avoided operating cost as periodically updated and accepted by the
Commission. If at any time electrical energy can be delivered to Edison
and Seller is contesting the claimed jurisdiction of any entity which has
not issued a license or other approval for the Project, Seller, in its
sole discretion and risk, may deliver electrical energy to Edison and for
any electrical energy purchased by Edison Seller shall receive payment
from Edison for (i) Energy pursuant to this Section, and (ii)
as-available capacity based on a capacity price from the Standard Offer
No. 1 Capacity Payment Schedule as approved by the Commission. Unless and
until all required licenses and approvals have been obtained, Seller may
discontinue deliveries at any time.
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8.1 Capacity Payments
Seller shall sell to Edison and Edison shall purchase from Seller
capacity pursuant to the Capacity Payment Option selected by Seller in
Section 1.8. The Capacity Payment Schedules will be based on Edison's
full avoided operating costs as approved by the Commission throughout the
life of this Contract.
8.1.1 Capacity Payment Option A -- As-Available Capacity.
If Seller selects Capacity Payment Option A, Seller shall be paid a
Monthly Capacity Payment calculated pursuant to the following
formula:
Monthly Capacity Payment = (A x D)+(B x D)+(C x D)
Where A = kWh purchased by Edison during on-peak
periods defined in Edison's Tariff
Schedule No. TOU-8.
B = kWh purchased by Edison during mid-peak
periods defined in Edison's Tariff
Schedule No. TOU-8.
C = kWh purchased by Edison during off-peak
periods defined in Edison's Tariff
Schedule No. TOU-8.
D = The appropriate time differentiated
capacity price from either the Standard
Offer No. 1 Capacity
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Payment Schedule or Forecast of Annual.
As-Available Capacity Payment Schedule
as specified by Seller in Section 1.8.
8.1.1.1 If Seller specifies the Standard Offer No. 1 Capacity
Payment Schedule in Section 1.8, then the formula set
forth in Section 8.1.1 shall be computed with D equal
to the appropriate time differentiated capacity price
from the Standard Offer No. 1 Capacity Payment
Schedule for the Contract Term.
8.1.1.2 If Seller specifies the Forecast of Annual
As-Available Capacity Payment Schedule in Section 1.8,
the formula set forth in Section 8.1.1 shall be
computed as follows:
a. During the First Period of the Contract Term,
D shall equal the appropriate time
differentiated capacity price from the
Forecast of Annual As-Available Capacity
Payment Schedule.
b. During the Second Period of the Contract Term,
the formula shall be computed with D equal to
the
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appropriate time differentiated capacity price
from Standard Offer No. 1 Capacity Payment
Schedule, but not less than the greater of (i)
the appropriate time differentiated capacity
price from the Forecast of Annual As-Available
Capacity Payment Schedule for the last year of
the First Period, or (ii) the appropriate time
differentiated capacity price from the
Standard Offer No. 1 Capacity Payment Schedule
for the first year of the Second Period.
8.1.2 Capacity Payment Option B--Firm Capacity Purchase
If Seller selects Capacity Payment Option B, Seller shall
provide to Edison for the Contract Term the Contract Capacity
specified in Section 1.3, or as adjusted pursuant to Section
8.1.2.6, and Seller shall be paid as follows:
8.1.2.1 If Seller meets the performance requirements set forth
in Section 8.1.2.2, Seller shall be paid a Monthly
Capacity Payment, beginning from the date of Firm
Operation equal to the sum
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of the on-peak, mid-peak, and off-peak Capacity Period
Payments. Each capacity period payment is calculated
pursuant to the following formula:
Monthly Capacity Period = A x B x C x D
Payment
Where A = Contract Capacity Price specified
in Section 1.8 based on the Standard
Offer No. 2 Capacity Payment Schedule
as approved by the Commission and in
effect on the date of the execution of
this Agreement.
B = Conversion factors to convert annual
capacity prices to monthly payments by
time of delivery as specified in
Standard Offer No. 2 Capacity Payment
Schedule and subject to periodic
modifications as approved by the
Commission.
C = Contract Capacity specified in
Section 1.3.
D = Period Performance Factor, not to
exceed 1.0, calculated as follows:
Period Performance Factor = [Period kWh Purchased by Edison
(Limited by the Level of
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Contract Capacity)] [0.8 x Contract
Capacity x (Period Hours minus
Maintenance Hours Allowed in Section
4.5.)]
8.1.2.2 Performance Requirements
To receive the Monthly Capacity Payment in Section
8.1.2.1, Seller shall provide the Contract Capacity in
each Peak Month for all on-peak hours as such peak
hours are defined in Edison's Tariff Schedule No.
TOU-8 on file with the Commission, except that Seller
is entitled to a 20% allowance for Forced Outages for
each Peak Month. Seller shall not be subject to such
performance requirements for the remaining hours of
the year.
a. If Seller fails to meet the requirements
specified in Section 8.1.2.2, Seller, in
Edison's sole discretion, may be placed on
probation for a period not to exceed 15
months. If Seller fails to meet the
requirements specified in Section 8.1.2.2
during the probationary period, Edison may
derate the Contract Capacity to the
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greater of the capacity actually delivered
during the probationary period, or the
capacity at which Seller can reasonably meet
such requirements. A reduction in Contract
Capacity as a result of this Section 8.1.2.2
shall be subject to Section 8.1.2.5.
b. If Seller fails to meet the requirements set
forth in this Section 8.1.2.2 due to a Forced
Outage on the Edison system, or a request to
reduce or curtail delivery under Section 8.4,
Edison shall continue Monthly Capacity
Payments pursuant to Capacity Payment Option
B. The Contract Capacity curtailed shall be
treated the same as scheduled maintenance
outages in the calculation of the Monthly
Capacity Payment.
8.1.2.3 If Seller is unable to provide Contract Capacity due
to Uncontrollable Forces, Edison shall continue
Monthly Capacity Payments pursuant to Capacity Payment
Option B for 90 days from the occurrence
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of the Uncontrollable Force. Monthly Capacity Payments
payable during a period of interruption or reduction
by reason of an Uncontrollable Force shall be treated
the same as scheduled maintenance outages.
8.1.2.4 Capacity Bonus Payment For Capacity Payment Option B,
Seller may receive a Capacity Bonus Payment as
follows:
Bonus During Peak Months
a. For a Peak Month, Seller shall receive a
Capacity Bonus Payment if (i) the requirements
set forth in Section 8.1.2.2 have been met, and
(ii) the on-peak capacity factor exceeds 85%.
Bonus During Non-Peak Months
b. For a non-peak month, Seller shall receive a
Capacity Bonus Payment if (i) the requirements
set forth in Section 8.1.2.2 have been met,
(ii) the on-peak capacity factor for each Peak
Month during the year was at least 85%, and
(iii) the on-peak
27
capacity factor for the non-peak month exceeds
85%.
c. For any eligible month, the Capacity Bonus
Payment shall be calculated as follows:
Capacity Bonus Payment = A x B x C x D
Where A = (1.2 x On-Peak Capacity Factor)-
1.02
Where the On-Peak Capacity Factor, not to exceed
1.0, is calculated as follows:
[Period kWh Purchased by Edison
(Limited by the Level of Contract
Capacity)]
On-Peak Capacity Factor = ((Contract Capacity) x (Period Hours
minus Maintenance Hours Allowed in
Section 4.5))
B = Contract Capacity Price specified in
Section 1.8 for Capacity Payment
Option B
C = 1/12
D = Contract Capacity specified in
Section 1.3
d. When Seller is entitled to receive
a Capacity Bonus Payment, the
Monthly Capacity
28
Payment shall be the sum of the Monthly Capacity
Payment pursuant to Section 8.1.2.1 and the
Monthly Capacity Bonus Payment pursuant to this
Section 8.1.2.4.
8.1.2.5 Capacity Reduction
a. Seller may reduce the Contract Capacity specified
in Section 1.3, provided that Seller gives Edison
prior written notice for a period determined by
the amount of Contract Capacity reduced as
follows:
Amount of Contract Length of
Capacity Reduce Notice Required
------------------ ---------------
25,000 kW or under 12 months
25,001 - 50,000 kW 36 months
50,001 - 100,000 kW 48 months
over 100,000 kW 60 months
b. Seller shall refund to Edison with interest at
the current published Federal Reserve Board three
months prime commercial paper rate, an amount
equal to the difference between (i) the
accumulated Monthly Capacity Payments paid by
Edison pursuant to Capacity Payment Option B up
to the time the reduction notice is received by
Edison, and
29
(ii) the total capacity payments which Edison
would have paid if based on the Adjusted
Capacity Price.
c. From the date the reduction notice is received
to the date of actual capacity reduction,
Edison shall make capacity payments based on
the Adjusted Capacity Price for the amount of
Contract Capacity being reduced
d. Seller may reduce Contract Capacity without
the notice prescribed in Section 8.1.2.5(a),
provided that Seller shall refund to Edison
the amount specified in Section 8.1.2.5(b) and
an amount equal to: (i) the amount of Contract
Capacity being reduced, times (ii) the
difference between the Current Capacity Price
and the Contract Capacity Price, times (iii)
the number of years and fractions thereof (not
less than one year) by which the Seller has
been deficient in giving the prescribed
notice.
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If the Current Capacity Price is less than the
Contract Capacity Price, only payment under Section
8.1.2.5(b) shall be due to Edison.
8.1.2.6 The Parties may agree in writing at any time to adjust the
Contract Capacity. Seller may reduce the Contract Capacity
pursuant to Section 8.1.2.5. Seller may increase the Contract
Capacity with Edison's approval and thereafter receive payment
for the increased capacity in accordance with the Contract
Capacity Price for the Capacity Payment Option selected by
Seller for the remaining Contract Term.
8.1.2.7 For Capacity Payment Option B, Seller shall be paid for
capacity in excess of Contract Capacity based on the
as-available capacity price in Standard Offer No. 1 Capacity
Payment Schedule, as updated and approved by the Commission.
8.2 Energy Payments - First Period
During the First Period of the Contract Term, Seller shall be paid a
Monthly Energy Payment for the electrical energy delivered by the
Seller and purchased
31
by Edison at the Point of Interconnection pursuant to the Energy
Payment Option selected by the Seller in Section 1.9, as follows.
8.2.1 Energy Payment Option 1 -- Forecast of Annual Marginal Cost of
Energy. If Seller selects Energy Payment Option 1, then during
the First Period of the Contract Term, Seller shall be paid a
Monthly Energy Payment for electrical energy delivered by
Seller and purchased by Edison at the Point of Interconnection
during each month in the First Period of the Contract Term
pursuant to the following formula:
Monthly Energy Payment = [(A x D) + (B x D) + (C x D)] x
E per Amend 1 section 5.
Where A = kWh purchased by Edison during on-peak
periods defined in Edison's Tariff Schedule
No. TOU-8.
B = kWh purchased by Edison during mid-peak
periods defined in Edison's Tariff
Schedule No. TOU-8.
C = kWh purchased by Edison during off-peak
periods defined in Edison's Tariff Schedule
No. TOU-8.
D = The sum of: (i) the appropriate time
differentiated energy price
32
from the Forecast of Annual Marginal Cost of
Energy, multiplied by the decimal equivalent
of the percentage of the forecast specified
in Section 1.9, and (ii) the appropriate
time differentiated energy price from
Edison's published avoided cost of energy
multiplied by the decimal equivalent of the
percentage of the published energy price
specified in Section 1.9.
E = Energy Loss Adjustment Factor For Remote
Generating Sites * per Amend 1 section 5
8.2.2 Energy Payment Option 2 -- Levelized Forecast of Marginal Cost
of Energy. If Seller selects Energy Payment Option 2 then
during the First Period of the Contract Term, Seller shall be
paid a Monthly Energy Payment for electrical energy delivered
by Seller and purchased by Edison each month during the First
Period of the Contract Term pursuant to the following formula:
Monthly Energy Payment = [(A x D) + (B x D) + (C x D)] X
- --------------------
* The Energy Loss Adjustment Factor For Remote Generating Site shall be
1.0, subject to adjustment by Commission orders and rulings.
33
E per Amend 1 section 6
Where A = kWh purchased by Edison during
on-peak periods defined in Edison's
Tariff Schedule No. TOU-8.
B = kWh purchased by Edison during mid-
peak periods defined in Edison's
Tariff Schedule No. TOU-8.
C = kWh purchased by Edison during off-
peak periods defined in Edison's
Tariff Schedule No. TOU-8.
D = The sum of:
(i) the appropriate time
differentiated energy price from the
Levelized Forecast of Marginal Cost
of Energy, for the First Period of
the Contract Term multiplied by the
decimal equivalent of the percentage
of the levelized forecast specified
in Section 1.9, and (ii) the
appropriate time differentiated
energy price from Edison's published
avoided cost of energy multiplied by
the decimal equivalent of the
percentage of the
34
published energy price specified in
Section 1.9.
E = Energy Loss Adjustment Factor For
Remote Generating Sites * per Amend
1 section 6
8.2.2.1 Performance Requirement for Energy Payment
Option 2
During the First Period when the annual
forecast referred to in Section 8.2.1 is
greater than the levelized forecast referred
to in Section 8.2.2, Seller shall deliver to
Edison at least 70 percent of the average
annual kWh delivered to Edison during those
previous periods when the levelized forecast
referred to in Section 8.2.2 is greater than
the annual forecast referred to in Section
8.2.1. If Seller does not meet the
performance requirements of this Section
8.2.2.1, Seller shall be subject to Section
8.5.
8.3 Energy Payments - Second Period
During the Second Period of the Contract Term, Seller shall be paid a
Monthly Energy Payment for electrical
- --------------------
* The Energy Loss Adjustment Factor For Remote Generating Sites shall be
1.0, subject to adjustment by Commission orders or rulings.
35
energy delivered by Seller and purchased by Edison at the
Point of Interconnection at a rate equal to 100% of Edison's
published avoided cost of energy as updated periodically and
accepted by the Commission, pursuant to the following formula:
Monthly Energy Payment = kWh purchased by Edison for each on-peak,
mid-peak, and off-peak time period
defined in Edison's Tariff Schedule
No. TOU-8
x Edison's published avoided cost of
energy by time of delivery for each
time period
x Energy Loss Adjustment Factor for
Remote Generating Sites*
Edison shall not be obligated to accept or pay for electrical
energy generated by the Generating Facility, and may request
Seller whose Generating Facility is one (1) MW or greater to
discontinue or reduce delivery of electric energy, for not
more than 300 hours annually during off-peak hours when (i)
purchases would result in costs greater than those which
Edison would incur if it did not purchase electrical energy
from Seller but instead utilized an equivalent amount of
electrical energy generated from another Edison source, or
- --------------------
* The Energy Loss Adjustment Factor For Remote Generating Sites shall be
1.0, subject to adjustment by Commission orders or rulings.
36
(ii) the Edison Electric System demand would require that Edison
hydro-energy be spilled to reduce generation.
8.4 Energy Payment Refund
If Seller elects Energy Payment Option 2, Seller shall be subject to the
following:
8.4.1 If Seller fails to perform the Contract obligations for any reason
during the First Period of the Contract Term, or fails to meet the
performance requirements set forth in Section 8.2.2.1, and at the
time of such failure to perform, the net present value of the
cumulative Energy payments received by Seller pursuant to Energy
Payment Option 2 exceeds the net present value of what Seller would
have been paid pursuant to Energy Payment Option 1, Seller shall
make an energy payment refund equal to the difference in such net
present values in the year in which the refund is due. The present
value calculation shall be based upon the rate of Edison's
incremental cost of capital specified in Section 1.9.
8.4.2 Not less than 90 days prior to the date Energy is first delivered
to the Point of Interconnection, Seller shall provide and maintain
a performance bond, surety bond,
37
performance insurance, corporate guarantee, or bank letter of
credit, satisfactory to Edison, which shall insure payment to
Edison of the Energy Payment Refund at any time during the First
Period. Edison may, in its sole discretion, accept another form of
security except that in such instance a 1-1/2 percent reduction
shall then apply to the levelized forecast referred to in Section
8.2.2 in computing payments for Energy. Edison shall be provided
with certificates evidencing Seller's compliance with the security
requirements in this Section which shall also include the
requirement that Edison be given 90 days prior written notice of
the expiration of such security.
8.4.3 If Seller fails to provide replacement security not less than 60
days prior to the date of expiration of existing security, the
Energy Payment Refund provided in Section 8.5 shall be payable
forthwith. Thereafter, payments for Energy shall be 100 percent of
the Monthly Energy Payment provided in Section 8.2.1.
8.4.4 If Edison at any time determines the security to be otherwise
inadequate, and so notifies Seller, payments thereafter for Energy
shall be 100
38
percent of the Monthly Energy Payment provided in Section 8.2.1.
If within 30 days of the date Edison gives notice of such
inadequacies, Seller satisfies Edison's security requirements,
Energy Payment Option 2 shall be reinstated. If Seller fails to
satisfy Edison's security requirements within the 30-day period,
the Energy Payment Refund provided in Section 8.5 shall be
payable forthwith.
9. PAYMENT AND BILLING PROVISIONS
9.1 For Energy and capacity purchased by Edison:
9.1.1 Edison shall mail to Seller no later than thirty days after the
end of each monthly billing period (1) a statement showing the
Energy and capacity delivered to Edison during the on-peak,
mid-peak, and off-peak periods, as those periods are Specified
in Edison's Tariff Schedule No. TOU-8 for that monthly billing
period, (2) Edison's computation of the amount due Seller, and
(3) Edison's check in payment of said amount.
9.1.2 If the monthly payment period involves portions of two different
published Energy payment schedule periods, the monthly Energy
payment shall be prorated on the basis of the percentage of days
at each price.
39
9.1.3 If the payment period is less than 27 days or greater than 33
days, the capacity payment shall be prorated on the basis of the
average days per month per year.
9.1.4 If, within thirty days of receipt of the statement, Seller does
not make a report in writing to Edison of an error, Seller shall
be deemed to have waived any error in Edison's statement,
computation, and payment, and they shall be considered correct
and complete.
9.2 Edison shall bill the Seller, on a monthly basis, for the costs
Edison has incurred in the transmission of the electrical energy from
the Project to the Point of Interconnection pursuant to the provisions
of Section 26.
9.3 Payments Due to Contract Capacity Reduction
9.3.1 The Parties agree that the refund and payments provided in
Section 8.1.2.5 represent a fair compensation for the reasonable
losses that would result from such reduction of Contract
Capacity.
9.3.2 In the event of a reduction in Contract Capacity, the quantity,
in kW, by which the Contract Capacity is reduced shall be used
to calculate the refunds and payments due Edison in accordance
with Section 8.1.2.5, as applicable.
40
9.3.3 Edison shall provide invoices to Seller for all refunds and
payments due Edison under this Section 9 which shall be due
within 60 days.
9.3.4 If Seller does not make payments as required in Section 9.2.3,
Edison shall have the right to offset any amounts due it against
any present or future payments due Seller and may pursue any
other remedies available to Edison as a result of Seller's
failure to perform.
9.4 Energy Payment Refund
Energy Payment Refund is immediately due and payable upon Seller's
failure to perform the contract obligations as specified in Section 8.5.
41
10. TAXES
10.1 Seller shall pay ad valorem taxes and other taxes properly
attributable to the Project. If such taxes are assessed or levied
against Edison, Seller shall pay Edison for such assessment or levy.
10.2 Seller shall pay ad valorem taxes and other taxes properly attributed
to land, land rights, or interest in land for the Project. If such
taxes are assessed or levied against Edison, Seller shall pay Edison
for such assessment or levy.
10.3 Seller or Edison shall provide information concerning the Project to
any requesting taxing authority.
11. TERMINATION
This Contract shall terminate if Firm Operation does not occur within 5
years of the date of Contract execution.
12. SALE OF GENERATING FACILITY
12.1 If Seller desires to sell the Generating Facility, Seller shall
promptly offer to Edison, or any entity designated by Edison in its
sole discretion, the right to purchase the Generating Facility.
Edison, or any such entity designated by Edison, shall have up to
sixty days following the offer to accept Seller's offer or reach
agreement with Seller.
12.2 If the Parties are unable to reach a satisfactory agreement within
sixty days following the offer pursuant to Section 12.1, and the
Generating Facility
42
is offered to any third party or parties, Edison, or any such entity
designated by Edison, has the right for thirty days following each
offer to agree to purchase the Generating Facility under the same
terms and conditions, if such terms and conditions are better to
Edison than those offered in Section 12.1. Any offers to sell made
more than two years after Edison's failure to accept a previous offer
to sell under Section 12.1, shall again be subject to the terms of
Sections 12.1 and 12.2.
12.3 Notwithstanding the foregoing, Seller shall have the right at any
time to sell or transfer the Generating Facility to an affiliate of
Seller and an affiliate of Seller may sell, transfer, or lease to
Seller without giving rise to any right of first refusal of Edison.
An "affiliate" of Seller shall mean a Party's parent, a Party's
subsidiary, or any company of which a Party's parent is a parent. An
"affiliate" of Seller shall also mean a partnership or joint venture
from which the Seller leases and operates the Generating Facility. A
"parent" shall mean a company which owns directly or indirectly not
less than 51% of the shares entitled to vote in an election of
directors of another company.
13. ABANDONMENT OF PROJECT
13.1 The Generating Facility shall be deemed to be abandoned if Seller
discontinues operation of the Generating
43
Facility with the intent that such discontinuation be permanent. Such
intent shall be conclusively presumed by either (i) Seller's notice
to Edison of such intent, or (ii) Seller's operation of the
Generating Facility in such a manner that no Energy is generated
therefrom for 200 consecutive days during any period after Firm
Operation of the first generating unit, unless otherwise agreed to in
writing by the Parties. If the Project is prevented from generating
Energy due to an Uncontrollable Force, then such period shall be
extended for the duration of the Uncontrollable Force, not to exceed
one year.
13.2 If Seller abandons the Generating Facility during the term of this
Agreement, Edison, or any entity designated by Edison in its sole
discretion, shall have the right to purchase the Generating Facility
pursuant to the provisions of Section 12.
14. LIABILITY
14.1 Each Party (First Party) releases the other Party (Second Party), its
directors, officers, employees and agents from any loss, damage,
claim, cost, charge, or expense of any kind or nature (including any
direct, indirect or consequential loss, damage, claim, cost, charge,
or expense), including attorney's fees and other costs of litigation
incurred by the First Party, in connection with damage to property of
the First
44
Party caused by or arising out of the Second Party's construction,
engineering, repair, supervision, inspection, testing, protection,
operation, maintenance, replacement, reconstruction, use or ownership
of its facilities, to the extent that such loss, damage, claim, cost,
charge, or expense is caused by the negligence of Second Party, its
directors, officers, employees, agents, or any person or entity whose
negligence would be imputed to Second Party.
14.2 Each Party shall indemnify and hold harmless the other Party, its
directors, officers, and employees or agents from and against any
loss, damage, claim, cost, charge, or expense of any kind or nature
(including direct, indirect or consequential loss, damage, claim,
cost, charge, or expense), including attorney's fees and other costs
of litigation, incurred by the other Party in connection with the
injury to or death of any person or damage to property of a third
party arising out of the indemnifying Party's construction,
engineering, repair, supervision, inspection, testing, protection,
operation, maintenance, replacement, reconstruction, use, or
ownership of its facilities, to the extent that such loss, damage,
claim, cost, charge, or expense is caused by the negligence of the
indemnifying Party, its directors, officers, employees, agents or any
person or entity whose negligence would be imputed to the
45
indemnifying Party; provided, however, that each Party shall be
solely responsible for and shall bear all cost of claims brought by
its contractors or its own employees and shall indemnify and hold
harmless the other Party for any such costs including costs arising
out of any workers compensation law. Seller releases and shall defend
and indemnify Edison from any claim, cost, loss, damage, or liability
arising from any contrary representation concerning the effect of
Edison's review of the design, construction, operation, or
maintenance of the Project.
14.3 The provisions of this Section 14 shall not be construed so as to
relieve any insurer of its obligations to pay any insurance claims in
accordance with the provisions of any valid insurance policy.
14.4 Neither Party shall be indemnified by the other Party under Section
14.2 for its liability or loss resulting from its sole negligence or
willful misconduct.
15. INSURANCE
15.1 Until Contract is terminated, Seller shall obtain and maintain in
force as hereinafter provided comprehensive general liability
insurance, including contractual liability coverage, with a combined
single limit of not less than $1,000,000 each occurrence. The
insurance carrier or carriers and form of policy shall be subject to
review and approval by Edison.
46
15.2 Prior to the date Seller's generating facility first delivers
electrical energy to the Point of Interconnection, Seller shall (i)
furnish certificate of insurance to Edison, which certificate shall
provide that such insurance shall not be terminated nor expire except
on thirty days prior written notice to Edison, (ii) maintain such
insurance in effect for so long as Seller's Generating Facility is
delivering electrical energy to the Point of Interconnection, and
(iii) furnish to Edison an additional insured endorsement with
respect to such insurance in substantially the following form: "In
consideration of the premium charged, Southern California Edison
Company (Edison) is named as additional insured with respect to all
liabilities arising out of Seller's use and ownership of Seller's
Generating Facility.
"The inclusion of more than one insured under this policy shall not
operate to impair the rights of one insured against another insured
and the coverages afforded by this policy will apply as though separate
policies had been issued to each insured. The inclusion of more than
one insured will not, however, operate to increase the limit of the
carrier's liability. Edison will not, by reason of its inclusion
under this policy, incur liability to the insurance carrier for
payment of premium for this policy.
47
"Any other insurance carried by Edison which may be applicable shall
be deemed excess insurance and Seller's insurance primary for all
purposes despite any conflicting provisions in Seller's policy to the
contrary."
15.3 If Seller fails to comply with the provisions of this Section 15,
Seller shall, at its own cost, defend, indemnify, and hold harmless
Edison, its directors, officers, employees, agents, assigns, and
successors in interest from and against any and all loss, damage,
claim, cost, charge, or expense of any kind or nature (including
direct, indirect or consequential loss, damage, claim, cost, charge,
or expense, including attorney's fees and other costs of litigation)
resulting from the death or injury to any person or damage to any
property, including the personnel and property of Edison, to the
extent that Edison would have been protected had Seller complied with
all of the provisions of this Section 15.
16. UNCONTROLLABLE FORCES
16.1 Neither Party shall be considered to be in default in the performance
of any of the agreements contained in this Contract, except for
obligations to pay money, when and to the extent failure of
performance shall be caused by an Uncontrollable Force.
48
16.2 If either Party, because of an Uncontrollable Force, is rendered
wholly or partly unable to perform its obligations under this
Contract, the Party shall be executed from whatever performance is
affected by the Uncontrollable Force to the extent so affected
provided that:
(1) The non-performing Party, within two weeks after the occurrence
of the Uncontrollable Force, gives the other Party written
notice describing the particulars of the occurrence;
(2) The suspension of performance is of no greater scope and of no
longer duration than is required by the Uncontrollable Force;
(3) The non-performing Party uses its best efforts to remedy its
inability to perform (this subsection shall not require the
settlement of any strike, walkout, lockout or other labor
dispute on terms which, in the sole judgment of the party
involved in the dispute, are contrary to its interest. It is
understood and agreed that the settlement of strikes, walkouts,
lockouts or other labor disputes shall be at the sole discretion
of the Party having the difficulty);
(4) When the non-performing Party is able to resume performance of
its obligations under this
49
Contract, that Party shall give the other Party written
notice to that effect; and
(5) Capacity payments during such periods of Uncontrollable Force on
Seller's part shall be governed by Section 8.1.2.3.
16.3 In the event that either Party's ability to perform cannot be
corrected when the Uncontrollable Force is caused by the actions or
inactions of legislative, judicial or regulatory agencies or other
proper authority, this Contract may be amended to comply with the
legal or regulatory change which caused the nonperformance.
If a loss of Qualifying Facility status occurs due to an
Uncontrollable Force and Seller fails to make the changes necessary
to maintain its Qualifying Facility status, the Seller shall
compensate Edison for any economic detriment incurred by Edison as a
result of such failure.
17. NON-DEDICATION OF FACILITIES
Neither Party, by this Contract, dedicates any part of its facilities
involved in this Project to the public or to the service provided under
the Contract, and such service shall cease upon termination of the
Contract.
18. PRIORITY OF DOCUMENTS
If there is a conflict between this document and any Appendix, the
provisions of this document shall govern.
50
Each Party shall notify the other immediately upon the determination of
the existence of any such conflict.
19. NOTICES AND CORRESPONDENCE
All notices and correspondence pertaining to this Contract shall be in
writing and shall be sufficient if delivered in person or sent by
certified mail, postage prepaid, return receipt requested, to Seller as
specified in Section 1.1, or to Edison as follows:
Southern California Edison Company
Post Office Box 800
Rosemead, California 91770
Attention: Secretary
All notices sent pursuant to this Section 19 shall be effective when
received, and each Party shall be entitled to specify as its proper
address any other address in the United States upon written notice to the
other Party.
20. PREVIOUS COMMUNICATIONS
This Contract contains the entire agreement and understanding between the
Parties, their agents, and employees as to the subject matter of this
contract, and merges and supersedes all prior agreements, commitments,
representations, and discussions between the Parties. No Party shall be
bound to any other obligations, conditions, or representations with
respect to the subject matter of this Contract.
21. THIRD PARTY BENEFICIARIES
This Contract is for the sole benefit of the Parties and shall not be
construed as granting any rights to any person
51
or entity other than the Parties or imposing obligations on either Party
to any person or entity other than the Parties.
22. NON-WAIVER
None of the provisions of the Contract shall be considered waived by
either Party except when such waiver is given in writing. The failure of
either Edison or Seller to insist in any one or more instances upon strict
performance of any of the provisions of the Contract or to take advantage
of any of its rights hereunder shall not be construed as a waiver of any
such provisions or the relinquishment of any such rights for the future,
but the same shall continue to remain in full force and effect.
23. DISPUTES
23.1 Any dispute arising between the Parties relating to interpretation of
the provisions of this Contract or to performance of the Parties
hereunder, other than matters which may not be settled without the
consent of an involved insurance company, shall be reduced to writing
stating the complaint and proposed solution and submitted to the
appropriate Edison manager, whose interpretation and decision thereon
shall be incorporated into a written document which shall specify
Edison's position and that it is the final decision of such manager.
A copy of such document shall be furnished to Seller within ten days
following the receipt of Seller's written complaint.
52
23.2 The decision of such manager pursuant to Section 23.1 shall be final
and conclusive from the date of receipt of such copy by the
complaining Party, unless within thirty days Seller furnishes a
written appeal to such manager. Following receipt of such appeal, a
joint hearing shall be held within fifteen days of said appeal, at
which time the Parties shall each be afforded an opportunity to
present evidence in support of their respective positions. Such joint
hearing shall be conducted by one authorized representative of Seller
and one authorized representative of Edison and other necessary
persons. Pending final decision of a dispute hereunder, the Parties
shall proceed diligently with the performance of their obligations
under this Contract and in accordance with Edison's position pursuant
to Section 23.1.
23.3 The final decision by the Parties' authorized representatives shall
be made within fifteen days after presentation of all evidence
affecting the dispute, and shall be reduced to writing. The decision
shall be final and conclusive.
23.4 If the authorized representatives cannot reach a final decision
within the fifteen-day period, any remedies which are provided by law
may be pursued.
53
24. SUCCESSORS AND ASSIGNS
Neither Party shall voluntarily assign its rights nor delegate its duties
under this Contract, or any part of such rights or duties, without the
written consent of the other Party, except in connection with the sale or
merger of a substantial portion of its properties. Any such assignment or
delegation made without such written consent shall be null and void.
Consent for assignment shall not be unreasonably withheld. Such assignment
shall include, unless otherwise specified therein, all of Seller's rights
to any refunds which might become due under the Contract. Seller may
assign all or any part of its interest under this Contract to a financing
institution to facilitate financing for the Project by the Seller.
25. EFFECT OF SECTION HEADINGS
Section headings appearing in this Agreement are inserted for convenience
only, and shall not be construed as interpretations of text.
26. TRANSMISSION
26.1 Edison shall endeavor to make arrangements with third parties for the
necessary transmission of the electrical energy from the Project to
the Point of Interconnection. Seller shall be responsible for all
costs associated with such transmission of electrical energy,
including the cost of transmission losses from the Project to the
Point of Interconnection.
54
26.2 If Edison, using its best efforts, is unable to secure satisfactory
firm transmission service or equivalent arrangements from third
parties which are required to transmit the electrical energy from the
Project to the Point of Interconnection, then Edison shall not be
liable to the Seller for any damages arising from Edison's failure to
secure said transmission service or arrangements nor will Edison be
required to purchase Energy which is not delivered or capacity which
is not made available at the Point of Interconnection.
27. AMENDMENT
If at any time during the term of this Agreement a change in circumstances
not anticipated at the time this Agreement was executed significantly
alters the rights or obligations of either Party, the terms of the
Agreement which are directly affected by the change shall be amended by
mutual agreement of Parties.
28. GOVERNING LAW
This Contract shall be interpreted, governed, and construed under the laws
of the State of California as if executed and to be performed wholly
within the State of California.
29. CONFIDENTIALITY
29.1 Except as provided herein, the Parties shall hold all information in
this Contract and all information related to or received pursuant to
this Contract as confidential.
55
29.2 Neither Party shall disclose any part nor the whole of this Contract
to any third party without the express prior written consent of the
other Party; such consent shall not be unreasonably withheld.
29.3 From time to time governmental and/or regulatory agencies may request
disclosure of the Contract or Contract-related information from
either Party or both Parties and if such is the case either Party or
both Parties may consent to such disclosure provided, that (i) the
requestor(s) be notified by the disclosing Party that the information
being released is confidential, and that (ii) the disclosing Party
inform the other Party, in writing, as to the nature of the
information disclosed and to whom disclosed.
30. MULTIPLE ORIGINALS
This Contract is executed in two counterparts, each of which shall be
deemed an original.
56
SIGNATURES
IN WITNESS WHEREOF the Parties hereto have executed this Contract
this 1st DAY of MARCH, 1984.
SOUTHERN CALIFORNIA EDISON COMPANY
By /s/Edward A. Myers, Jr.
---------------------------------
Name EDWARD A. MYERS, Jr
----------------------------
Title VICE PRESIDENT
---------------------------
MAGMA ELECTRIC COMPANY
By /s/Andrew W. Hoch
---------------------------------
Name Andrew W. Hoch
----------------------------
Title Vice-President
---------------------------
57
APPENDIX A
SOUTHERN CALIFORNIA EDISON COMPANY
LONG-TERM STANDARD OFFER
CAPACITY PAYMENT SCHEDULE -
FORECAST OF ANNUAL AS-AVAILABLE CAPACITY(1)
Line As-Available Capacity(2)
No. Year ($/kW-year)
- -----------------------------------------------------------------------------
1 1983 70
2 1984 76
3 1985 81
4 1986 87
5 1987 94
6 1988 101
7 1989 109
8 1990 117
9 1991 126
10 1992 148
11 1993 158
12 1994 169
13 1995 180
14 1996 194
15 1997 206
- --------
1. This forecast to be used in conjunction with Capacity Payment Option A.
2. The annual as-available capacity ($/kW-yr) will be converted to a
seasonal time-of-delivery ((cent)/kWh) value that is consistent with
as-available time-of-delivery rates current authorized by the Commission for
Avoided AsAvailable Capacity.
A-1
APPENDIX B
SOUTHERN CALIFORNIA EDISON COMPANY
LONG-TERM STANDARD OFFER
ENERGY PAYMENT SCHEDULE -
FORECAST OF ANNUAL MARGINAL COST OF ENERGY(1)
Line Annual Marginal Cost of
No. Year Energy ((cent)/kWh)
- -----------------------------------------------------------------------------
1 1983 5.3
2 1984 5.6
3 1985 5.7
4 1986 6.0
5 1987 6.4
6 1988 6.9
7 1989 7.6
8 1990 8.1
9 1991 8.6
10 1992 9.3
11 1993 10.1
12 1994 10.9
13 1995 11.8
14 1996 12.6
15 1997 13.6
- --------
1. This forecast to be used in conjunction with Energy Payment Option 1.
B-1
APPENDIX C
SOUTHERN CALIFORNIA EDISON COMPANY
LONG-TERM STANDARD OFFER
ENERGY PAYMENT SCHEDULE -
LEVELIZED FORECAST OF MARGINAL COST OF ENERGY(1)
5-Year
Initial Levelized Levelized
Line Year of Forecast Forecast
No. Delivery ((cent)/kWh) ((cent)/kWh)
- -----------------------------------------------------------------------------
1 1983 5.7 6.5
2 1984 6.0 6.9
3 1985 6.4 7.3
4 1986 6.8 7.9
5 1987 7.3 8.5
6 1988 7.9 9.1
- --------
1. Levelized Forecast to be used in conjunction with Energy Payment Option 2.
C-1
AMENDMENT NO. 1
TO
POWER PURCHASE CONTRACT
BETWEEN
SOUTHERN CALIFORNIA EDISON COMPANY
AND
MAGMA ELECTRIC CO.
AMENDMENT NO. 1 TO
POWER PURCHASE CONTRACT BETWEEN
SOUTHERN CALIFORNIA EDISON COMPANY AND
MAGMA ELECTRIC CO.
1. Parties
The Parties to this Amendment No. 1 to the Power Purchase Contract between
Southern California Edison Company and Magma Electric Co., executed on
March 1, 1984, hereinafter referred to as "Amendment No. 1", are Southern
California Edison Company, a California corporation, hereinafter referred
to as "Edison", and Magma Electric Co., a Nevada corporation, hereinafter
referred to as "Seller", hereinafter sometimes referred to individually as
"Party" and collectively as "Parties".
2. Recitals
This Amendment No. 1 is made with reference to the following facts, among
others:
2.1 On March 1, 1984, Edison and Seller executed the Power Purchase
Contract to provide the terms and conditions for the sale by Seller
and the purchase by Edison of electrical power delivered by Seller to
Edison at the Point of Interconnection from the 29,500 kW electrical
generating facility located at Niland, California.
2.2 The Parties desire to amend the Power Purchase Contract to modify the
terms of the payments for energy.
-1-
3. Agreement
The Parties agree to the following.
4. Effective Date
This Amendment No. 1 shall become effective upon execution by the Parties.
5. Amendment to Section 8.2.1
5.1 The formula for calculating the Monthly Energy Payment is deleted in
its entirety and replaced with the following:
"Monthly Energy Payment = [(AxD)+(BxD)+(CxD)] x E"
5.2 The definition of "F" is deleted in its entirety.
6. Amendment to Section 8.2.2
6.1 The formula for calculating the Monthly Energy Payment is deleted in
its entirety and replaced with the following:
"Monthly Energy Payment = [(AxD)+(BxD)+(CxD)] x E"
6.2 The definition of "F" is deleted in its entirety.
7. Effect of this Amendment No. 1
Except as amended herein, all terms, covenants, and conditions contained
in the Power Purchase Contract shall remain in full force and effect.
-2-
8. Signature Clause
The signatories hereto represent that they have been appropriately
authorized to enter into this Amendment No. 1 on the behalf of the Party
for whom they sign. This Amendment No. 1 is hereby executed as of this
10th day of May, 1984.
SOUTHERN CALIFORNIA EDISON COMPANY
By /s/Edward A. Myers, Jr.
---------------------------------
Edward A. Myers, Jr.
Vice President
MAGMA ELECTRIC COMPANY
By /s/Andrew W. Hoch
---------------------------------
Andrew W. Hoch
Vice-President
-3-
AMENDMENT NO. 2
TO
POWER PURCHASE CONTRACT
BETWEEN
SOUTHERN CALIFORNIA EDISON COMPANY
AND
VULCAN/BN GEOTHERMAL POWER COMPANY
AMENDMENT NO. 2 TO
POWER PURCHASE CONTRACT BETWEEN
SOUTHERN CALIFORNIA EDISON COMPANY AND
VULCAN/BN GEOTHERMAL POWER COMPANY
1. Parties
The Parties to this Amendment No. 2 to the Power Purchase Contract between
Southern California Edison Company and Magma Electric Co., executed on
March 1, 1984, hereinafter referred to as "Amendment No. 2", are Southern
California Edison Company, a California corporation, hereinafter referred
to as "Edison", and Vulcan/BN Geothermal Power Company, a partnership,
hereinafter referred to as "Seller", hereinafter sometimes referred to
individually as "Party" and collectively as "Parties".
2. Recitals
This Amendment No. 2 is made with reference to the following facts, among
others:
2.1 On March 1, 1984, Edison and Magma Electric Co. ("Magma") executed
the Power Purchase Contract to provide the terms and conditions for
the sale by Magma and the purchase by Edison of electrical power
delivered by Magma to Edison at the Point of Interconnection from the
29,500 kW electrical generating facility located at Niland,
California.
2.2 May 10, 1984, Edison and Magma, the original Seller under the Power
-1-
Purchase Contract, amended the Power Purchase Contract to modify the
Monthly Energy Payment formulas specified in Sections 8.2.1 and
8.2.2.
2.3 On January 4, 1985, Magma assigned its rights, title and interest in
the Power Purchase Contract to Vulcan Power Company and Edison
consented to such assignment on January 11, 1985.
2.4 On August 30, 1985, Vulcan Power Company assigned its rights, title
and interest in the Power Purchase Contract to Vulcan/BN Geothermal
Power Company and Edison consented to such assignment on September
25, 1985.
2.5 The Parties acknowledge that the Date of Firm Operation for the
Generating Facility occurred on February 10, 1986 and desire to amend
the Power Purchase Contract to reflect that fact.
3. Agreement
The Parties agree to the following.
4. Effective Date
This Amendment No. 2 shall become effective upon execution by the Parties.
5. Amendment to Section 1.8 (Option B)a
Section 1.8 (Option B)a of the Power Purchase Contract is deleted in its
entirety and replaced with the following: "a. The Contract Capacity Price:
$158/kW-yr. (Firm Capacity)."
-2-
6. Effect of this Amendment No. 2
Except as amended herein, all terms, covenants, and conditions contained
in the Power Purchase Contract shall remain in full force and effect.
7. Signature Clause
The signatories hereto represent that they have been appropriately
authorized to enter into this Amendment No. 2 on the behalf of the Party
for whom they sign. This Amendment No. 2 is hereby executed as of this 1st
day of April, 1986.
SOUTHERN CALIFORNIA EDISON COMPANY
By /s/Edward A. Myers, Jr.
------------------------------------
Edward A. Myers, Jr.
Vice President
VULCAN/BN GEOTHERMAL POWER COMPANY, A
PARTNERSHIP
VULCAN POWER COMPANY, PARTNER
By: /s/Andrew W. Hoch
-----------------------------------
Name: Andrew W. Hoch
---------------------------------
Title: President
--------------------------------
BN GEOTHERMAL, INC., PARTNER
By: /s/Harry W. Ray
-----------------------------------
Name: Harry W. Ray
---------------------------------
Title: President
--------------------------------
-3-